The beverage giant, Coca-Cola (KO), is gearing up to unveil its third-quarter financial results before the market opens on Wednesday, October 23rd. This report holds significant weight as investors are eager to gauge the impact of easing inflation and the company’s performance in international markets.
Earnings Expectations:
Analysts predict that Coca-Cola will report third-quarter revenue of $11.60 billion, a slight dip compared to the $11.95 billion recorded in the same period last year. Despite this projected revenue decline, Coca-Cola has consistently outperformed analyst expectations for revenue in over 10 consecutive quarters.
On the earnings front, analysts are anticipating earnings per share of 74 cents, aligning with the third-quarter earnings per share from the previous year. While Coca-Cola has exceeded earnings estimates in eight out of the last ten quarters, it’s worth noting that they’ve met expectations in the remaining two. The company has consistently beaten analyst estimates in the past two quarters, adding to the anticipation surrounding this upcoming report.
Key Factors to Watch:
Coca-Cola’s earnings announcement arrives just weeks after its beverage rival, PepsiCo Inc. (PEP), released its third-quarter results. PepsiCo’s report showed an earnings per share beat but missed on revenue, a trend that could make Coca-Cola’s report even more critical for the beverage sector, especially considering PepsiCo’s decision to lower its full-year revenue guidance.
Notably, Coca-Cola boosted both its earnings per share and revenue guidance after its second-quarter results. Maintaining or further raising these forecasts could potentially position Coca-Cola more favorably compared to its competitor.
Looking at stock performance, Coca-Cola has enjoyed a strong year-to-date gain of 16% in 2024, surpassing PepsiCo, which is up less than 1% for the year. However, both companies lag behind the overall S&P 500, which has seen a significant rise of over 23% this year.
Concerns over inflation and the emergence of weight-loss drugs that could lead to reduced consumption of carbonated beverages have presented headwinds for both Coca-Cola and PepsiCo. As inflation eases, according to reports, the commentary from Coca-Cola regarding consumer demand and trends will be crucial in determining how the stock reacts following the release of the report.
International Market Momentum:
One of the driving forces behind Coca-Cola’s strong second-quarter earnings was the performance of its Europe, Middle East, and Africa region. This region experienced a remarkable organic revenue growth of 30%, outpacing the 10% increase witnessed in North America. Analysts and investors will be closely observing whether Coca-Cola can sustain this international momentum in the third quarter.
Other Key Points:
The impact of Coca-Cola’s sponsorship of the 2024 Summer Olympics and the influence of new partnerships, like the one with Oreo, on sales momentum will also be areas of focus for the report.
Coca-Cola Stock Performance:
Coca-Cola’s stock closed Tuesday up 0.14% at $69.55, trading within its 52-week range of $54.04 to $73.53.
As we await Coca-Cola’s third-quarter results, it’s clear that this report carries significant weight for both the company and the beverage sector as a whole. The company’s ability to navigate inflation, maintain its international strength, and capitalize on strategic partnerships will be key factors shaping investor sentiment and the future direction of its stock.